Why The Subscription Economy Is Unfair!

November 4, 2017

 

 

The world is charging full throttle to a pay as you go, on demand, buy a subscription to everything model.  We all know the traditional things we can subscribe to - magazines, pay TV, gym memberships...

 

And then of course there’s all the online products and services like software, apps (for anything and everything), subscription boxes (combinations of products limited only by your imagination), music, even subscriptions to services like Amazon Prime that give you better deals and faster delivery if you're a member.

 

There are so many things you can subscribe to now, and with the impending rise of the driverless car, it is by no stretch of the imagination that you’ll be able to subscribe to a car service in the near future. Simply pay your monthly fee for a number of km of travel and then just click the go button in an app and a car will arrive at your front door to take you where you need to go. Need more km for the month? No problem, simply upgrade to the next plan.

 

I personally think this is an amazing time we live in. So many possibilities. And with subscriptions, it’s enabling access to these possibilities by creating sustainable business models for companies with recurring revenue, with the incredible benefit to customers - paying only for what they need, and only when they need it.

                                                                                                                      

But, as great as this subscription economy is for both business and the customer, there is one glaring imbalance that screams unfairness in my mind.

 

There are hundreds of millions of dollars being invested by companies in subscription management software to optimise and reduce churn (people cancelling or moving to another provider). See Zuora, arguably a leader in this industry as an example.

 

The ability for businesses to make significant increases in revenue by understanding the psychology of customers around recurring payment models is incredible. Combine that with the leaps and bounds around app design that taps into the human ‘features’ that enable app stickiness (Drew Johnson has a great article on this). And after reading the eye-opening book “Hooked" by Nir Eyal, you’ll never look at apps like Pinterest, Facebook, and many others the same way again.

 

One noticeable example, or perhaps a more brutal method of keeping customers subscribed, is the ability and difficulty to unsubscribe from a service. This is clearly one aspect that drives the customer to frustration and often the effort required to complete the unsubscribe journey can be a massive deterrent and many will stay subscribed simply because it is “just too hard!”

 

Take Spotify for example. A fantastic product, but the effort required to unsubscribe is so complex that we ended up writing not one, but two articles describing the process for our customers!

 

It’s not that there’s anything technically wrong about any of this evolution. Business will always look for the edge to gain and retain customers. As long as it's done in a non-manipulative way with value to the customer at the forefront, I believe this is essential for business survival and I love how Nir Eyal advocates this approach in his book.

 

So what's so unfair about all this?

 

Well, who is looking after the customer? Where are the millions of dollars being invested in educating and helping customers navigate and manage this new way of acquiring goods and services?

 

Sure, customers get a great deal and a virtual tap to turn services on and off, HOWEVER, unlike the traditional way of purchasing goods and services where the customer pays once and never has to think about the purchase again, customers now need to manage a river of monthly expenditure.

 

Every customer now needs to be constantly vigilant ensuring that goods or services that are no longer required are ‘turned off’.

 

It’s generally acknowledged that the ‘span of control’ capability of a human (the number of things you can manage simultaneously without losing control) is between 3-10 things.

 

So it's completely unsurprising that managing more than a handful of subscriptions (including knowing the cost of each subscription, when they’re due, plus all the other specifics of the service) is clearly pushing an individual’s capability to remember it all.

 

This predictable failure to keep track of all these subscriptions will result in an often-unrecognised drain on the bank balance for the customer.

 

According to Moneywise in the UK, Brits waste 448 Million pounds each month on subscriptions. Although I was unable to find a study that related to other countries, it’s easy to extrapolate the loss of literally billions every month across the subscription economy as a whole.

 

This of course, is all profit flowing to the business side of the transaction equation.

 

Which is exactly the purpose of the significant investment in psychology and optimisation, to maximise revenues for business. Read this as: Businesses want you to forget instead of cancelling when you don’t need it.

 

The world we live in has changed.  We don’t buy things anymore - we rent them.

 

It's unfair that the business side of the economy has all this development and investment to ensure profits are maximised, often at the expense of the customer. It’s not wrong, bad, or unethical – it’s just blatantly unfair for the customer.

 

At TrackMySubs, our purpose is to help customers by providing the tools to navigate and manage in the subscription economy. We want to give people the edge they need to get the best value from this amazing time we live in, without them being taken advantage of.

PS: The irony of our product being a subscription is not lost on us - a subscription model enables us to be viable. Our position here is not that subscriptions are bad, but they should be provided to the customer in an ethical and transparent manner.

 

One of our primary goals in providing tools to help people in the new economy, is that our customers see us as this example of value, transparency, and honesty that should be present in all subscription models. If we can’t provide such a valuable service to our customers where they want to stay subscribed, and instead need to resort to tactics like making it difficult to unsubscribe, well, we don’t believe that's a sustainable business model.

 

 

 

 

 

Gabe Alves  |  Founder of TrackMySubs

Share on Facebook
Share on Twitter
Please reload

Featured Posts

Subscription Model: E-Commerce Benefits and Best Practices

August 29, 2019

1/10
Please reload

Recent Posts

July 4, 2018

April 27, 2018

November 4, 2017